Three Different Models and Strategies For Websites
It’s tough to find information on the web about the various website models that a web entrepreneur uses to make money online. This post is my first attempt at formally identifying some of these models.
The Data-Centric Website
A data-centric website is a website that supplies visitors with data. There are two kinds of websites that I will discuss that fall into this category: hard data sites and content sites.
Hard Data Websites
Hard data websites usually have a database that feeds a website interface with data that users are looking for. This data might be historical stock prices, restaurant menus or major league baseball statistics (just naming a few examples).
A content website is similar to a hard data website in that it provides information to users, but the main difference is that a content website is subjective content. Examples of this kind of content are blogs, news websites, and review websites (where individuals review hotels, restaurants, etc.).
Strategies For Data-Centric Websites
Someone looking to start a data-centric websites has a number of approaches to consider. For one, where is this data or content coming from? Are you planning on supplying the data (blogs)? Or will you be borrowing data from another source (mashups)? Or do you expect your visitors to supply the data (Wikipedia)?
On one of my websites, YourBelly.com, I decided to utilize two of the above strategies. YourBelly.com’s data is dietary specific menus for restaurants in every city. When it comes to the menu data, we seeded the site with data and are now turning it over to the masses, expecting users and visitors to continue populating the database with quality, relevant data. At the same time, I’m pulling review data from Yelp.com through their free API. So, YourBelly.com uses user-supplied data and borrows data from Yelp.com.
The Service Website
The service website offers a website or a function to its users. For example, Mint.com provides financial tools for users, Salesforce.com provides CRM and sales tracking tools for users, Google Apps provide applications such as word processing, spreadsheets and more for users.
The strategy for these websites is either to sell a service through a website (Salesforce.com) or offer a free service and make money through other means such as advertisements or affiliate sales (Mint.com). Either way, each website is dependent on building a fantastic service or function that users will either pay for or come by the millions to use.
Software-as-a-Service is a relatively new term referring to web-based applications. It basically describes applications that reside entirely on the internet, where in the past, they are installed and run on your local desktop.
The advantages of SaaS applications is that they are completely portable, you can access them from any computer with an internet connection, you do not have to worry about installation, maintenance or upgrades and many of the big SaaS applications have a large base of developers adding functionality. The negative aspects of this software is that your data is sitting somewhere else (some people don’t like the idea of sensitive data out in the “cloud”) and the security is potentially weaker due to the applications being accessible over the internet.
SaaS is growing more popular and the trend is only getting stronger.
The Social Website
The social website is a site that connects users based on similar interests or any other factor. The biggest examples of these are Facebook.com, MySpace.com and LinkedIn.com. Furthermore, websites such as Ning.com allow users to create their own social websites or social networks based on whatever topic or interest they wish.
Social Website Revenue Issues
The revenue models of these websites are definitely questionable. While any websites with any traffic can generate some level of revenue and the sites like Facebook.com do generate nice revenue, they definitely have not figured out yet how to generate the kinds of revenue needed to justify the multi-billion dollar valuations that have been thrown around regarding these companies.
I have written before on 20smoney.com about my belief on where social networks are heading in the future. I discussed that social networks will move away from proprietary networks to a more single / internet-wide open social network. This trend will be very interesting to watch.
Planning Your Web Business or Website
When planning your potential website or business, it’s important to recognize which model you are pursuing. Identifying the model will help you in other decisions such as your revenue model, growth strategy and marketing approach.